For Professor

| September 25, 2015

Three-Year Strategic Management Proposal of Starbucks

Introduction

Starbucks is a global powerhouse with multinational enterprises with a large network of stores in over 30 foreign countries. Popularity of its products such as Italian-style coffee, teas, pastries, espresso beverages, and confections made Starbucks one of the best retailing stores in the recent history and world’s biggest specialty coffee chain. Having positioned Starbucks as the dominant retailer, roaster, and brand of specialty coffee and coffee drinks in North America and spawned the establishment of the specialty coffee business, management’s long-term objective was to make Starbucks the most respected and recognized brand in the world. They undertook an expansion program where new stores being opened at a high rate. Management aimed at having 15,000 stores opened worldwide by 2006. Starbucks manager, Schultz believed that that the company scope of long-term opportunity had been underestimated. He increased the target new stores to 30,000 worldwide by 2013, with at least half of them being outside the United States.

Starbucks only command 7 percent of the coffee drinking market share in the United States and 1 percent of the global market share. This made the manager fill that they still have room for growth and expansion. He viewed Starbucks as an infant in the world market considering that coffee although its worldwide consumption was a stigma, it was the second most preferred beverage worldwide, after water (Matthews, 2005).

This paper outlines Starbucks long-term management proposal. The proposal features the company’s economic, marketing and financial plan, organizational structure and other company feature aimed at ensuring its continued growth. Thesis statement is with proper management and planning Starbucks will be able to command large market share in the world beverage market.

Background Information

Starbucks started in 1971 by three academics and coffee aficionados, Jerry Baldwin, Zev Siegel, and Gordon Bowker opened Starbucks coffee, tea, and spice in touristy place market in Seattle. The three entrepreneurs share a love for powdered coffees and exotic tea and they believed they could build a clientele in Seattle that would appreciate the best coffees and tea. The store was an immediate success, with its sales exceeding expectations; this was because of interest stirred by a favorable article in the Seattle Times. At its inception, Starbucks ordered its coffee beans supplies from peet’s- a Dutch immigrant who had started Peet’s Coffee and Tea bar, at Berkeley, California, in 1966 and who was their mentor. The management latter set up their own roasting operations, blends, and flavors.

In the early 80s, the company had opened four stores in Seattle and had been posting a profit throughout its life. Siegel had had been the company chief executive officer left the company to pursue other interest leaving Jerry Baldwin to perform the day to day management. Gordon remained involved as an owner but devoted much time in his advertising and design firm. In 1981, Howard Schultz, the manager and vice president of Swedish manufacturer of classy kitchen utensils and coffeemakers based in U.S, paid a visit to Starbucks. This was because he needed to know why Starbucks was selling much of his company’s products. He was struck by the partners’ philosophy in business. He was later hired in at Starbucks where he worked relentless to ensure that the company succeeds. He was quite dedicated in his duties to an extent of acclimating to the casual dress code, gaining credibility and creating trust with fellow workers and making the move from the prestigious, official style to more casual and low-key in Starbucks. He left the company in 1985 after a series of frustration due to resistance from his bosses on his ideas to start his own company. With the help of a lawyer friend he and Jerry commitment to invest from Starbucks money, he set up Schultz’s coffee bar enterprise. The company grew and acquired Starbucks in 1987. Schultz worked hard to ensure the company’s success and ensuring his employees felt motivated. He ensured that his company was the best place to work worldwide. Employees were offered share purchase option among other benefits. He also participated in social activities in all the countries where he had branches. In 1996, the company stretched itself to enter the markets of Japan, Hawaii, and Singapore through joint ventures. By the last quarter of 2008, Starbucks total international stores had reached 5113 stores and 11567 stores in United States. The company had entered in countries such as England, Australia, and China (Roney, 2004).

Starbucks Current Situation and performance

Starbucks seems to be an emerging in the international market. This is through the reorganization aimed at making it the best global company that makes a difference in lives of people all over the world. Starbucks current location in the international markets and its successful ventures has placed their goals quite close to being achieved. Its aim to be a global brand seems to be effective in the Starbucks favor. This has assisted them to create a center of attention of many companies would like to share a partnership. The company is providing a strong base for its future development in the international market; this has further promoted their mission to be the chief specialty retailers in the world (Koteen, 2007).

Strategic posture

Mission

For the three-year period, Starbucks mission: “To arouse and nurture the individual spirit-one individual, one mug, and one region at a time.” It aimed to make Starbucks a premier purveyor of the finest coffee worldwide and maintain our uncompromising principles while we grow. Its continued success was possible through their set of goals that the company aimed to achieve and its set of principles. The company’s six principles for the next three years are:

  1. To provide a pleasant working environment and ensure everybody in the company is treated with dignity and respect.
  2. Ensure that they embrace diversity as one of the essential components in their business.
  3. In their purchasing, ensure the highest standards of excellence are applied.
  4. Ensure roasting and fresh delivery of our coffee.
  5. Ensure they develop and maintain an enthusiastically satisfied customer base all the time.
  6. Contribute to their community and environment positively, and realize that profitability is essential for the company’s future success.

Through this mission, statement along with the set of guidelines would offer a focus for employees as they make strategic decisions. It supports both employees and customers by ensuring that customers are satisfied all the time. The mission shows alignment with the vision by showing how the company plans to reach the broad goals set by vision statement (Siegel, 2002).

Objectives and strategies:

For the three-year period, here are the Starbucks objectives:

Our Coffee

As it has always been, the company aims at maintaining quality products. The company is also passionate about ethically sourcing the finest coffee bean, ensure outmost care when roasting, and promoting the livelihood of the people who grow their raw materials. “We care all about this deeply; our work is never done.”

Our Partners

For the period we will be called partners, because it is not just a job we are doing, it is our excitement. Together, we hold diversity to build a place where everybody can be ourselves. We will be treating each other with respect and dignity.

Our Customers

For the period, we will connect with, laugh with, and strengthen the lives and our customer’s status. It will all start with the promise of a perfectly prepared beverage and goes beyond to human connection.

Our Stores

When our customers fill a sense of belonging, our stores becomes their haven, a break from the worries outside and a place where friends can meet. We offer enjoyment at the speed of life and always full of humanity.

Our neighborhood

To us every store will be part of a community, and we take our responsibility to the kind neighbors seriously. We want to be invited in every area we do business. We want to be a force that can bring positive action by bringing together our partners, customers, and the community to contribute in every day. We see that our responsibility and potential for benefit is quite large. The whole world is looking for Starbucks to set the new standards and will do it.

Our Shareholders

As Starbucks, we have information that as we deliver in each of these areas, we have the kind of success that rewards our shareholders. To ensure that we endure and thrive as Starbucks and everyone it touches, we are fully responsible to get every elements right. From all mentioned it is clear that Starbucks is aiming at succeed through its quality products, diversity in business and place, to satisfy customer and shareholders, through pleasant and coexistence nearly with everybody.

Economic assessment

Starbucks economic assessment includes the assessment of direct consequences, indirect economic impacts, and cost benefit analysis of their expansion program. Over the three year, Starbucks is aiming at opening branches all over the world. This will play a long way to increase their international market. The company has several means to enter in the new market: opening new branches in the foreign market or through licensing and joint venture. Before they decide to open a branch economic analysis, have to be conducted to know viability of the country or area. Their expansion program should target areas that have favorable demographic profiles and those that could be serviced and supported by the company’s operations infrastructures. They will be targeting large cities that serve as a hub (Gratton, et al, 1999). One of the core competences the company is targeting is that of identifying the best retailing site for its new coffee stores. The company would search the best real estate team that will in the coffee bar industry and the best system that that will ensure that it identify most attractive city block and the best of all. This will be achieved through building an excellent relationship with local real estate representatives in areas where they target to open a store. In markets outside U.S. Starbucks would have a two-expansion plan: either open Starbucks-owned and operated stores, or license a sound and well-established local company that is capable and have knowledge in retailing in the target host country to develop and operate new Starbucks stores. The company will continue to use local partners to assist them recruit talented individuals, set up relationship with suppliers, locate suitable stores sites, and cater the local markets conditions.

The company is also projecting to improve the company’s work environment. This will play a significant role in ensure employees motivation. They will continue to offer employees fringe benefit to employees to employees with above average skills and skilful work habits. The company is also targeting to participate in social responsibilities to the community where they do business. This will be economically viable, as customers will fell satisfied to buy products from a company that participates in their activities.

Marketing Assessment Plan

Over the years, Starbucks have been witnessed as it rise from a market in Seattle to a company that today is offers quality premium coffee with superior customer service and at a premium price worldwide. They will employ the porter’s differentiation focus strategy to ensure they provide a product and service to specific market niche and differentiate from the competitors in specific areas. We will be aiming to emerge the a high cost, specialized selection provider that will offer specially tailored lines of coffee and tea products to coffee loving customers at a premium price. They will utilize the focus differentiation strategy and partner with company marketing and advertising directions to those strategies. They will focus on high branding and marketing by word of mouth, key partnerships, and alliances.

The company will not aggressively market its product. Instead, they will rely on their name and reputation to promote sales. Through the company’s hard work, awareness customer experience, making an ethical decision and proper employees training they are to be ranked the most precious global brands. In the current economy, Starbucks should broaden their focus from high-end priced products and offer an economic package during these harsh economic times. This could ensure the continued existence of the company in the tougher financial time and maintain the customer base (Wilson, and Gilligan, 2004).

Organizational structure

To build global momentum over the three years, the company requires establishing an excellent corporate structure to accelerate its growth strategy. The company performance over the years has positioned Starbucks in significant international opportunities ahead and the acceleration of the company global strategy. The new multibrand and multichannel strategy and the new leadership and organizational structure are believed to optimize the speedy and the focus of going forward. From its current structure, Starbuck should move to a new three region organizational structure as follows: China and Asia-consisting of all Asia Pacific market and China, Americas this will cover United States, Mexico, Canada, and Latin America., EMEA-Europe, United Kingdom, Africa, Middle East, and Russia. A president who will oversee the company-operated business, working closely with licensed and shared venture trade associates in each market will head each region. With this structure, Starbuck will be able to promote its performance based on regions unique needs and unique features (Courtney, 2002).

Starbucks financial plan

Over the three years, the company’s general performance is expected to improve. This is due to the management structure to be introduced that is more result oriented, enhanced marketing planning, and economic assessment. The following analysis shows how the expected Return on investment and equity is expected to grow over the three years period.

This will be as a result of the company utilizing the equity and their asset properly to increase their revenue.

The company’s profit margins are also expected to grow tremendously over the years. This would be as a result of efficient management of its assets and business as a whole. The projected profit margins for the period are as follows:

With this tremendous growth of the company assets and profit margins, the company final statement also reflects those increases. The company Projected profit and loss statement shows how the company’s profit will continue to increase and the resulting balance statement shows how their asset base strengthens. They are shown below:

Projected income statement for the three years period

Conclusion

This forward-looking statement relating to certain changes to the leadership and organizational structure of Starbucks Corporation, and trends concerning speeding up of the brand and channel for global growth strategies; company positioning for global opportunities; leadership and organizational alteration effect on the Starbucks strategies and opportunities, as well as on business outcome in the regions (Betz, 2001). These statements focus on the current existing operating, monetary and competitive information, which is subject to a number of risks and reservations, linked with its business. Actual outcome may differ significantly depending on a diversity of factors such as successful execution of the changes in leadership and organization structural, the persons ability after appointed to lead regions and businesses to projected results, fluctuations in the international economy, the blow of competition; coffee, dairy and other raw material cost and availability; costs and victorious execution of, other initiatives; and risks.

 

 

References

Betz, F. (2001). Executive Strategy: Strategic Management and Information Technology. New York: John Wiley & Sons.

Courtney, R. (2002). Strategic Management for Voluntary Nonprofit Organizations. London: Routledge.

Gratton, L., Hailey, V. H., Stiles, P., and Truss, C. (1999). Strategic Human Resource Management: Corporate Rhetoric and Human Reality . Oxford: Oxford University Press.

Koteen, J. (2007). Strategic Management in Public and Nonprofit Organizations. Westport, CT: Praeger.

Matthews, J. R. (2005). Strategic Planning and Management for Library Managers. Westport, CT: Libraries Unlimited.

Roney, C. W. (2004). Strategic Management Methodology. Westport, CT: Praeger

Siegel, G. B. (2002). Public Employee Compensation and Strategic Management. New York: Quorum Books.

Wilson, R. M., and Gilligan, C. (2004). Strategic Marketing Management. Oxford, England: Elsevier Butterworth-Heinemann

Get a 5 % discount on an order above $ 150
Use the following coupon code :
2020Discount
Need help with a Religion essay
work

Category: Homework Help

Our Services:
Order a customized paper today!
Open chat
Hello, we are here to help with your assignments